If you’re planning to opt into the GST composition scheme for the current financial year 2022-23, 31st March is the last date. Any small business owner with a turnover of up to INR 1.5 Crore can opt for the GST composition scheme, which is a simplified tax filing facility. Such businesses can pay nominal taxes every quarter and file tax returns only once a year.
All the new applicants to the GST composition scheme for the FY 2022-23 must submit Form CMP-02 on the GST website on or before 31st March 2022. If you are enrolled on the scheme in the previous year, there is no need to apply for it again.
The GST composition scheme is introduced to save small businesses from several GST compliance rules, reduce accounting hassles, and charge less tax. Small and medium enterprises, including grocery stores, Kirana stores, vegetable & fruit vendors, small manufacturing business units, can benefit from this simplified tax filing system.
The businesses enrolled under the GST composition scheme will benefit from the GST rates of 1%, 5% and 6% of the total business turnover.
Which Businesses Can Apply for the Composition Scheme
To apply for the composition scheme, businesses supplying goods with an annual turnover of up to INR 1.5 Cr are eligible. For firms in the services industry, a yearly turnover of up to INR 50 lakh is a must. However, some businesses have been excluded from applying the GST composition scheme, including pan or tobacco businesses, ice cream manufacturers, non-resident taxpayers, e-commerce companies, tax collectors and inter-state suppliers.
How to Apply for GST Composition Scheme
Eligible businesses can apply for the composition scheme by following the below steps.
- Log in to the GST website at www.gst.gov.in.
- Sign up by opening an account
- Go to the‘ Services’ section on the top
- Select the ‘Registration’ option.
- Choose the ‘Application to Opt for Composition Levy’ option.
- Enter all required details as in the Form GST CMP-02.
- Check the ‘Declaration’ and ‘Verification’ boxes.
- Enter the name of the authorised signatory and place.
- Click on the ‘Save’ button and submit the form.
GST Composition Scheme Turnover Limit
To facilitate business for comparatively small supply companies, an additional scheme u/S 10 of the GST Act, 2017 has been implemented under which suppliers with aggregate turnover ranging from INR 10 lakh or INR 20 lakh to INR 75 lakh or INR 1 Crore can opt to pay a fixed amount of tax on the total turnover instead of charging regular tax on the supply.
Initially, the Composition Scheme GST had a limit of INR 1 Crore, which meant that only businesses with a gross turnover of below INR 1 Crore could register for the composition levy.
In North-Eastern states like Sikkim and Himachal Pradesh, the GST Composition Turnover Limit was kept lower at INR 75 Lakhs per annum as the tax base is smaller than in other states in India.
The GST composition scheme limitation for states was increased to INR 1.5 Crore at the 32nd GST Council meeting organised on 10th January 2019. This means that business owners with a yearly turnover of up to INR 1.5 Crore will register under the GST composition scheme.
GST Composition Scheme Compliance
Businesses registered under the composition scheme must pay taxes every quarter on or before the 18th of the month following the quarter. For instance, they need to pay taxes on or before the 18th of July for April to June quarter. Along with the taxes, they need to submit, Form CMP-08, a challan-cum-statement.
At the end of the fiscal year, they need to file annual returns in Form GSTR-4 on or before 30th April. The annual return form contains all the details of sales, tax liabilities and payments made in the financial year.
By 31st May 2022, which is 60 days from the start of the new FY, the new members of the composition scheme must file Form ITC-03. In the form, they need to disclose the GST paid on all purchases, and the stock value of the raw materials or goods purchased from both GST and non-GST businesses.
Read more articles related to GST
Documents Required for GST Registration
About Rule 42 and 43 Of CGST SGST
GST ARN Status
Cement GST Rate
Benefits Advantages GST Compliant Business India
Export GST Bill Invoice Template
GST Bill Book Design and Template
GST Amnesty Scheme